Nvidia shares fell about 1% on Thursday as the company reported slower-than-expected revenue growth, but experts say demand for its artificial intelligence chips remains strong. The chipmaker is selling its new Blackwell chip to companies like TSMC at a rapid pace, with shipments exceeding initial estimates.
However, the production ramp-up is expected to pressure gross margins in the short term due to supply chain constraints. Nvidia’s new flagship chip, Blackwell, has an advanced packaging process that limits production capacity. The company has faced a design flaw and had to make a “mask change,” which set back production timelines and cost money.
Despite these challenges, Nvidia executives say demand for its chips remains strong, with analysts predicting the company will outdo initial estimates this quarter. However, experts warn of potential bottlenecks worsening supply chain constraints.
“Nvidia’s production ramp-up is always a challenging process,” said Ben Bajarin, CEO and principal analyst at Creative Strategies. “The laws of physics would say that there’s a limit to how fast you can ramp.”
Source: https://www.reuters.com/technology/nvidias-supply-snags-hurting-deliveries-mask-booming-demand-2024-11-21